USD/JPY Price Analysis: Tumbles below 135.00, slumps below the 20 and 100-day EMA

• USD/JPY slides 0.73% after three days of bullish action as US inflation cools down.
• The pair drops below key daily moving averages, signaling the potential for further downside.

The USD/JPY snaps three days of gains, slides below the 135.00 figure, and distanced from the 20 and 100-day Exponential Moving Average (EMA) at 134.53 and 134.24, respectively, after US inflation cooled down. The fall of the US 10-year Treasury bond yield weighed on the USD/JPY pair due to its close correlation. At the time of writing, the USD/JPY is trading at 134.22, down 0.73%.

USD/JPY Price Analysis: Technical outlook

Given that the USD/JPY dropped below crucial daily moving averages, the USD/JPY bias shifted neutral. On its way south, the USD/JPY pair fell below dynamic support levels, like the 20 and 100-day EMAs, opening the door to test the 134.00 psychological price level.

If USD/JPY breaks below the latter, the USD/JPY pair would challenge the 50-day EMA at 133.97 before testing the 200-day EMA at 133.87. A breach of the latter will expose the May 4 swing low of 133.49.

Conversely, if USD/JPY reclaims the 20-day EMA at 134.53, the next resistance would be the 135.00 figure, followed by the May 10 high of 135.47. Once cleared, the next demand area would be the May 2 high at 137.77.

Oscillators turned bearish, as the Relative Strength Index (RSI) indicator crossed below the 50-mid line, while the 3-day Rate of Change (RoC) records negative readings.

Trend: Below 135.00, further downside expected.

USD/JPY Price Chart – Daily chart